Apicorp reports highest first-half profit yet as interest rates rise

The lender’s comprehensive income rises 87% to $108.7 million

Apicorp's headquarters in Al Khobar in Saudi Arabia's Eastern Province. The lender was established in 1975. Photo: Apicorp

The Arab Petroleum Investments Corporation, a multilateral lender focused on the energy sector, reported its highest first-half profit yet while operating income grew as interest rates rose.

Apicorp’s total comprehensive income in the six months to the end of June rose by 87 per cent year-on-year to $108.7 million, the company said on Tuesday.

Net operating income increased 32 per cent annually to $129 million on “operations efficiencies, rising interest rate environment, and funding optimisation”, it said.

Total assets during the period grew by 10.3 per cent as a result of $600 million worth of long-term external funding taken in the first quarter of 2023 to replace aged borrowings in the fourth quarter of 2022.

“The first six months of the year saw Apicorp continue to strengthen its financial position with record results and notable achievements at the corporate and business unit levels,” Aabed Al Saadoun, undersecretary for oil and gas affairs at Saudi Arabia’s Ministry of Energy and chairman of Apicorp, said.

“We look forward to continuing this robust momentum with more meaningful impact-driven investments which support the energy transition agenda of our member countries and the broader Mena region.”

Apicorp is owned by 10 members of the Organisation of Arab Petroleum Exporting Countries – Saudi Arabia, UAE, Kuwait, Libya, Iraq, Qatar, Algeria, Bahrain, Egypt and Syria.

The multilateral lender was established in 1975 to extend financial support to Arab countries in the energy sector.

Apicorp’s investment portfolio increased to $1.3 billion for the January-June period, from $1.2 billion, with the successful exit from Ashtead Technology “recording better-than-expected capital gains”, it said.

In July, Apicorp said it completed the sale of its equity investment in Ashtead, a provider of technologically-advanced subsea solutions, tools and systems to the construction and maintenance of offshore energy infrastructure. It made the investment in the company in 2016 along with UK-based private equity firm, Buckthorn Partners.

The lender's corporate banking portfolio grew 5 per cent year-on-year to $4.3 billion and net interest income rose 10 per cent to $45.9 million, benefitting from a favourable interest rate environment, it said.

Interest rates continued to climb globally as central banks raised interest rates to tame inflation, boosting the profit margin of lenders.

Apicorp’s treasury and capital markets portfolio increased by $1 billion annually to reach $3.9 billion, recording a net income of $11.9 million.

“Taking advantage of the favourable interest environment, we continued to optimise our business structure, operations, and expand our range of innovative impact-driven financial and investment solutions,” Khalid Al Ruwaigh, chief executive of Apicorp, said.

“Not only do we carefully observe the short-term results, but also we plan for the future of Apicorp, hence we have finalised our five-year corporate strategy and launched the rebranding exercise.

“In doing so, we strive to further cement our legacy as a leading enabler of a secure and sustainable energy future for the region.”